Masthaven’s new director of intermediaries, Rob Barnard, has seen a huge change in the buy-to-let arena since tax changes took effect, at a time when London house prices have remained high.
He says: “We have seen a reduction in the number of purchase transactions, and a move towards more remortgage business. With purchases we have seen a change from those applying with their personal names to those applying with limited company names.”
A large part of this is due to the change in tax treatment on buy-to-let properties, and the fact that income tax relief on interest payments is being phased out, something of particular concern if the landlord is a higher rate taxpayer.
In addition, the yields on many properties in the southeast have reduced dramatically, as house prices remain high. This has prompted many landlords to look further north, where property prices are lower.
Mr Barnard says: “Yields in London are significantly lower than in northern parts of the country – Manchester, Liverpool, Nottingham and Hull – because property in London is so expensive, but in the north you can still buy relatively modestly.”
Buy-to-let is a big part of the mortgages that Masthaven provides – making up 50 per cent of all its lending.
It is an intermediary-only lender, starting out as a second-charge and bridging lender, and then receiving its banking licence three years ago, so it could get into savings and lending.
It also does first-charge lending on residential purchases. But second-charge lending still exists, and there is still space for it, says Mr Barnard. “Second-charge has changed over the past few years. There are many times when you would pick a second-charge over a remortgage,” he says.
“If, for example, you have recently taken out a five-year repayment mortgage, and six months later you need to take some money out, why would you consider a remortgage when you get an early repayment charge and when you can get a second-charge with rates are as low as they have ever been?
“Why not borrow additional money?”
Mr Barnard started out in financial services working for the Cheshire Building Society. He says: “In Macclesfield, if you didn’t go to university you either went to work for ICI or the Cheshire Building Society. I worked my way up from general clerk to managing a number of branches.”
He then joined Verso, which was the forerunner of Platform.
Helping those turned away
He says: “I’ve never sold a rate, I’ve sold a solution.”
Masthaven, he says, tries to find solutions for people who have been turned away from the High Street, usually because the credit score turned them down. This could be because they may have been slightly late with a credit card payment, and there is a “blip” on their credit score.
“Does that mean they should get turned down for a mortgage?” he asks.
“We do lend to people with blips on their credit file, but we have to be careful about [the label] ‘sub-prime’.